Firms waste £60bn of working capital

Analysis by the accountants Deloitte reveals that British companies are sitting on £60bn of unproductive working capital, despite the widespread adoption of "just in time" and other methods of minimising liquid capital requirements.

The analysis highlights how the consumer sector is sitting on over £13bn of excess working capital and the industrial sector has over £8bn locked up in unproductive working capital.

Andrew Harris, Deloitte's associate partner in corporate finance, said: "While structural reasons are often cited as the prime drivers of working capital in these sectors, an all-encompassing focus on revenue and margin is often the key driver. It is our experience that a significant amount of working capital can be released without adversely impacting the underlying business."